“Misguided” Legislation Will Cripple Security Companies and Associations

IFSEC Global interviewed Tony Botes, secretary and administrator at the Security Services Employers Association (SSEO) and Security Association of South Africa (SASA).

Covering the court battle between PSIRA and the associations, pending legislation stipulating South African ownership of security firms and controversial remuneration legislation, this Q&A serves as a preview of Botes’ scheduled talks at IFSEC South Africa (see adjacent box to register).

IFSEC Global: Tony, what will you be talking about at IFSEC South Africa?

Tony Botes: I will be talking on two major topics during my slot: the state of the private security industry and non-compliance in the private sector.

The first will touch on The current legal action against PSIRA [the Private Security Industry Regulatory Authority] and the Minister of Police in respect of the unilateral and, in our opinion, unwarranted and illegal fee increases due by security service providers in 2012 as high as 1,000%, as well as the demand that these fees be payable annually up front instead of monthly in arrears.

We, the associations, lost the initial High Court action – again, we believe a very poor judgement in every respect – and the matter was heard in the SCA [Senior Court of Appeal] on 5 May 2014, judgement expected within four to six weeks.

It is quite possible that the loser in this appeal application will not take it lying down and will refer the matter to the Constitutional Court, the highest court in the country.

IG: What impact has the case had on your association?

TB: The parties, applicants and respondents, have already thrown millions of rand into the legal bottomless pit and we stand to cough up much more before this saga is resolved.

In the meantime PSIRA is cash-starved and getting to the stage where they will not be able to fulfill their mandate of being a watchdog for the industry. It would be ideal if the parties could mutually agree on an acceptable funding model, but it does not seem if this will happen whilst in the throes of legal battles. We live in hope!

IG: Will your first talk encompass any other topics?

TB: The potential – and highly probable – legal battle against the same adversaries in respect of the Private Security Industry Amendment Bill, already passed by our Parliament, but still subject to Presidential signature and the drawn-out redrafting of the regulations.

The Bill proposes, inter alia, that all security service providers must have a minimum of 51% South African ownership, which will not only impact on the ‘foreign’-owned guarding and armed response companies – G4S, Securitas, ADT and Chubb – but also on those foreign companies who import and distribute security related equipment such as Panasonic, Kenwood, etc.

IG: And what’s your view of this legislation?

TB: The government is of the misguided opinion that these relatively few foreign companies are a threat to our national security, but not even the fairy tales we heard as kids are as far-fetched!

Every security service provider in South Africa is already ‘managed’ by South African citizens and in a few cases by foreigners with permanent residence status. How can a few dozen foreigners overthrow our relatively new democracy?

IG: What’s your view on the idea that security staff are underpaid?

TB: The Minister of Labour recently, in January 2013, promulgated a ‘correction notice’ to seriously amend a critical definition in the remuneration legislation for security officers, to such an extent that remuneration costs – which make up about 75% to 80% of all security guarding costs – rose by about 20%.

Although we are fully aware – and have publicly conceded – that security personnel are grossly underpaid, we have tried to rectify this situation by negotiating salary increases, bonuses, allowance and premiums at more than 2% above the CPI rate annually for the last 12 or 15 years.

Despite our efforts, consumers are, in most cases, loathe help us achieve our goals and are, in very many cases, granting their service providers increases significantly below the inflation rate. This has, of course, resulted in profit margins being eroded to such an extent that a post office savings account offers a better rate of return, without all of the risk inherent to the private security industry.

Negotiations for the 2015/2016/2017 period are due to commence again in September 2014. Just imagine: three employer organisations – the SASA being by far the largest – facing close to 20 diverse trade unions across the negotiation table; fun all round!

IG: Please tell us a little about your second talk…

TB: The second topic is one of very serious concern. It is estimated that the majority of security service providers are not complying with South African and private security industry legislation, insofar as many companies are unregistered (with PSIRA) and, as such, operate under the radar without fear of being discovered or prosecuted.

And many companies ignore minimum standards set out in the sectoral determination, which is the legislation governing minimum levels of remuneration and minimum conditions of employment.

Many companies also make illegal use of ‘undocumented foreigners’, illegal immigrants who are untrained, unscreened for criminal records and – as such – unregistered with PSIRA. These employees are more often than not too afraid to complain of remuneration exploitation because of the fear of arrest and deportation.

Many so-called employers are making use of “independent contractors” who work excessive hours without overtime premiums or higher remuneration for Sundays and public holidays. This principle has been labelled as slave labour by government, a sentiment that our association and all legitimate and responsible service providers endorse.

Many service providers either refuse to participate in the statutory industry provident fund because they have to match the employees’ contributions equally, simply because they can reduce their remuneration costs by the 7.5% premium and gain an unfair advantage in the tender process to obtain or retain security contracts.

This, however, results in the employees not being considered for retirement, funeral or death benefits, a social catastrophe if one considers that there are now almost 500,000 registered and active security officers in South Africa.

Many security service providers actually deduct the provident fund, but illegally and willfully fail to pay over either the employees’ contributions or their own matching contributions to the provident fund administrators. This is blatant theft!

This leaves the employees blissfully unaware that they do not enjoy the cover that they are paying for on a monthly basis, year after year. But remember, their employers can now tender for new business at about 15% lower than their compliant competitors or tender slightly lower than the norm and line their collective pockets!

All of these factors, individually and collectively, pose a serious threat to the legal, compliant, ethical and professional security service providers, but neither the security regulator nor the Department of Labour have the ability or resources to make much of a dent in this matter.

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